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Chief Actuary for SS - Raid the Retirement Fund!
Stephan Goss, the chief actuary for Social Security (SS) provided a detailed report on the status of the SS Disability Fund (DI) to the House of Representitives. The short story is that DI is going bust in a few years. The options to fix this problem were spelled out in the report. The extremes of the required "fix" range from an immediate cut in DI benefits of 16%, or an increase in DI payroll taxes of 20%.
Nothing new there. But, there is a "Plan B" for the DI Fund. The solution is to raid the SS Retirement Fund for the deficits at DI:
A simple tax-rate reallocation between OASI and DI, as was done in 1994, could equalize the financial prospects of the trust funds avoiding reserve depletion until 2033.
Note: "Simple tax-rate reallocation" means $40+b a year....
Bingo! The raid on the retirement fund results in no cuts in benefits, and no new taxes. What's not to like about that result? The gutless wimps in D.C. would love to kick the can down the road a decade, therefore the Raid solution is an obvious choice. (The consequence of the Raid would be to reduce the expected life of the Retirement Trust Fund by as much as five years,.)
This is not the first time this has come up. The Congressional Budget Office, in its 2/5/13 report on the SS Trust Funds had these words in a footnote:
CBO’s baseline assumes that the Commissioner will pay DI benefits in full even after the trust fund is exhausted.
Note: For a discussion of the CBO report, see my article from 2/10/13 (Link).
Okay, we now have two legs of the government who have (functionally) suggested that a raid on the OASI fund is a possible fix for DI. Lightening does not strike twice in the same place very often, especially in Washington. The idea of raiding one fund to preserve another, has just gotten another big supporter. If the folks at AARP understood what was being proposed - they would flip their wigs!
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The True Cost of the Disability Program
I have a list, (it's pretty short) of the folks who I think are "doing the right thing" in Washington. Stephen Goss was on that list. I'm disappointed with him and his presentation of the "Facts" about the DI program.
Mr. Goss's report to the House ran nineteen pages; there are 14 charts. (Link) Everything a Congressman (or the public) could ever want to know about the DI program is spelled out in detail.
But, Goss completely left out the most critical cost of DI. The Chief Actuary failed to identify a cost directly related to DI. The numbers are big - $80b in 2012. The estimate is for more than a trillion of over the coming decade. If you look beyond that time horizon, the costs that Goss failed to identify are in the mega-trillions.
Goss failed to provide the full picture when he did not disclose the DI costs to Medicare. Every individual who gets DI benefits ALSO gets Medicare.
In a report dated 3/14/2013 (Link), the Congressional Budget Office (CBO) accurately described the real costs of DI:
Total government spending on DI beneficiaries is substantially higher than DI expenditures alone.Disabled beneficiaries receive coverage under Medicare, regardless of their age.
The cost of Medicare benefits received by DI beneficiaries was about $80 billion in 2012; CBO expects that it will be $130 billion in 2023.
I give Stephen Goss an "F" for failing to provide all of the information needed to evaluate the DI program. How do you sweep a trillion dollars under the carpet?
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@Bruce - just as whining for some good journalism on this topic, I hear NPR is going to do a whole week of stuff on people on SDI, they teased with an academic who was wondering why SDI went up so much in 90s when economic times were better, said SDi has been doubling about every 15 years...said average SDI payments $1000 a month, plus healthcare coverage.
I give Bruce an "F" for this slight of hand.
Goss failed to provide the full picture when he did not disclose the DI costs to Medicare. Every individual who gets DI benefits ALSO gets Medicare.
Goss failed to provide the full picture when he did not disclose(subtract) the DI costs to(from) Medicare and provide the honesty challenged with red meat carved directly from the bones of the weakest among us.. Every individual who gets DI benefits ALSO gets Medicare.
Allow me....There is NO separate D.I. Medicare long term cost as a category because this figure is already part of the long term Medicare estimates.
Why count this figure twice? By implication of course...dishonest and misleading at best.
hilarious.
F for you too Benny for not knowing the difference between slight and sleight....
though I surely lack the education of Poop Clement and the intellectual opacity of BK allow me to present you with an "F" for showing more concern with the limits of my time than the honesty of the original article.
Grammar Bitchez!
I have a brother who had two strokes before age 50. We were able to arrange SSDI for him in a snap.
In the process of doing so I have seen first hand the abuse of the system.
GibsMeDat City, pure and simple.
In addition, the Social Security Administration is staffed, for the most part, by sympathetic libs and run-of-the-mil civil service types.
That makes the idea a non-starter.
Grim situation.
That is MJ's nose up there, and yes, there are a few more checkpoints on the list these days.
That fund was already raided years ago. It's asset base is US treasuries that are diluting in value rapidly. SS is called a Ponzi scheme for a reason. For DI to borrow against a Ponzi scheme is empty of reason. Remember no politician has ever had to pay for his promises, it is always us that do unless the politician has already spent our money in creative ways we are unaware of.
The problem with SSDI is that the Obama administration turned it into Welfare 2.0. They are funneling people into the program to keep them off the unemployment line. One extreme example, a factory shuts down (in Puerto Rico). 247 of the 250 people employed by the factory end up on SSDI.
Until we have a sane, honest government willing to say "Enough!", there's little point to trying to save SSDI or any of these other programs. Really, the best thing would be to have the velocity of deficit and losses accelerate triggering a rapid early collapse. That will do less damage than a drawn out failure that racks up staggering debt.
We could sell Hawaii and Alaska to the Russians and China for 16 Trilion dollars. It would also bring them in closer to our ballastic missles. T LEAST THE RUSSIANS WILL DRILL THE OIL AND MAYBE SELL US SOME!
I've always heard it was hard to get SSDI, yet I see all these slimeball retards in the bar where I work that are on it. Mostly, because they're too fat, or too reliant on drugs and/or some supposed PTSD just due to life (Read: too lazy to work). I don't get it.
It pisses me off. I've been crushed in, not one, but two bad car accidents (neither of them my fault). I'm a walking disaster, yet I still go to work and take care of my own shit. Then, I get some turd on a barstool that is on SSDI, and screaming for another cocktail and whining how he'd tip me more, but he's on disability.
So, I short-shot 'em.
Is their any intelligent analysis or journalistic investigation on DI usage. My hunch, from watching people around me is people who always could have gotten it under existing rules never did before because they had jobs and benes that net much more the DI and Medicare...remember most people on DI are getting $1000, $1500 a month. Only if you are working poor or desperately unemployed/homeless does that kind of benefit package without working look appealing.
I know people who wanted to keep working despite physical disabilities but simply couldnt find a job, these are garbage haulers, construction workers, manufacturing workers, maids, food service. There are often many $10/hr without benes jobs for such people, but they have to HUSSLE. Now if you are in your 50s, no longer of any value to todays employers and you just want any sort of job, good luck competing with younger more fit people. Only the best, healtheist, un-injured 50 year olds are going to be able to do as well as younger adults in these phsyical jobs, you have to stand a lot, you have to multi-task, you have to catch on quick because employer not inclined to waste a dime training you, you have to move around a lot or have to take a beating (repetitive motion like equipment drivers in construction or maids, food preparers). Employers will routinely discard you simply because you cant keep up.
I know my brother is trying to do it at about 55 years old. Despite being willing to do hard work that is mostly given to illegal immigrants, depsite always being on time, despite consistently passing all drug tests given to him, despite going back to community college to study specialty measurement, quality control things with the school said was the most in demand, highest employment percentages of grads, despite being always willing to take least desirable time/shifts like midnights, afternoons etc. he gets booted from jobs for not learning the machine quick enough, for being slower, less dexerity than the young kids etc.. He has all kinds of foot trouble from years on his feet, diabetes, vision trouble, back trouble, most days he gets through the day by heavy use of Ibuprofen, Advil etc. The guy could probably apply for disability...he would probably net hald his existing typical annual salary but he can no longer find fairly steady work, he would be tempted. This a guy that once had a low-skill manufacturing job in early 80s that paid $63,000/yr in todays dollars, with pension benes, healthcare etc.
I work in construction so I see a lot of construction labor guys that mirror my brother's tales in manufacturing, a lifetime of working with their bodies and they get worn down in their late 40s and 50s. Then, they get passed up, set packing and replaced with younger guys. There isnt enough jobs for them all so, the employees pick the most fit ones.
30-40 years ago, a guy in 50s like these guys would have senoirity on a job, they'd have union mentality of making sure not to take anyones job, they have to show up 40 hours a week but could always make really good money in work that would accomodate their declingin physical state and the could retire inthe early 60s with a pension, soc security, annuities etc since they had made good wage whole life, kids school was cheap. Now those same gusy are under-employed, unemployed, falling apart and desperate. Is it a surprise that many more of these types would be trying for SDI?
Also I know individual cases of people applying for SDI and not getting it when it seems that they would be a slam dunk. I know a miliary vet with brain damage/memory issues/bad headaches, 60 percent heart damage due to cox-sakie (sp?) virus, and other health issues who got full disability from VA due the all ailments, but has been rejected by soc security disability (he work private jobs before and after military) for years.
Also from my own experience, I know a lot of adult children with issues like ASD who in a better economy would have likely gotten some sort of menial job, now are wards of their parents, and parents apply for SDI for them. Again, these people take at least 3-4 years and many lawyers to get SDI payments. Maybe their parents with fat and happy middle class lives wouldn't have even bothered to get SDI for their audlt child they supported before but now they are stretched and need the extra income in the household.
Maybe fraud is rampant in SDI, I dont know, but from what I have seen, I'm guessing a lot of its due to desperation and bad economy, lack of good paying jobs, lack of demand for workers that are perfect, aren't stars, have strange personalities aren't fit etc. When unemployement was low, when low skill workers were stillin demand a lot of not so fit, not so normal people could still make good money, find a niche...now they are out and the rest of use are paying for them.
Just my anecdotal take on this, but I really want some good intvestigative journalism into what is really leading to big increase in SDI.
Moneymutt:
Tangentially, when things were good, we were in a very easy finance-based society.
I used to run a lot in CA in 2005-2006 marathons and everyone I met was a mortgage broker or a realtor. (Made for shallow dialogue...)
Those are the folks out of work who were recently still looking for $150k "salaries"... They were lucky.
That easy money is long gone and today you have to hustle to create value.
There isn't enough margin today for the marginal workers or marginal skill-sets.
Dude---it's redistribution!
Your comment reminded me of how sick I feel when I see construction workers at the convenience/gas stores walking out with their big drinks, junk food, and sometimes cigarettes. There are people who can do manual labor late into life around the world if they eat a natural diet, but the SAD diet will make one disabled in your 30's. It is essential to eat healthy or we will not have the health to sustain our families. No more corporate junk food and drink.
This article should have been under humor, as there is NO money in these funds, just bonds and numbers. This Goss guy and the rest are pretending to manage money that they are pretending is there. LOL. hujel
Think of this as, hold on. The tour is on a pause so that we can move the Germany sign four cages up because it's the next stop on the tour.
turn left go down one block,
turn left, go down one block,
turn left, go down one block, turn left, you have arrived at your destinantion.
Welcome to government accounting!
credibility is a bitch hey Bruce? sauce for the Cyprus goose is sauce for the SS gander
Are ALL the people in DC and in the effin' financial world CRAZY??? Are they ALL idiots? here... I'm going to lay it all out for y'all...
THERE IS NO SS OR DISABILITY FUND!!!
They have been rolled into the general treasury and SPENT! The treasury is the outfit that owes about $17 TN USD!!!
THERE IS NO RETIREMENT PIGGY BANK!!!
SS is gone, and the private retirement "plans" in 401K's and such are mostly tied up in Equities which as soon as the bubble pops AGAIN will be worthless!!!
THERE IS NO MONEY LEFT TO STEAL!!!
Dumb azzes...
Sure there is----money that is printed. Just " follow the money " and you know who is stealing it. Of course it will not last as all Ponzi schemes collapse. But in meantime there is definitly money that is being created at the expense of those who saved it. A former Sec of Treasury once told me " there are only two ways to make money---save it or create it " Unfortunatly in his waning years he was influenced by others and chose the latter and was convicted of fraud.
It is very surreal to read about one bankrupt fund raiding a second one with no assets.
I suppose it is seductive to fall into the ways of DC accounting and pretend they are solving something, but like Cypriot deposits...its gone!
in theory "there are many assets here"...but they must be willing and able to contribute. there is a "militant wing" involved here as well:
http://en.wikipedia.org/wiki/Gray_Panthers
i find it interesting that it was begun by a gal "forced to retire." in any case here was the only action of real protest i can recall
http://boatertalk.com/forum/LiquidLounge/1666723
sure it wasn't "Rolling Thunder" by the harley guys...hey, people fight. i wouldn't call it an "entitlement." this is a tax on EARNED income. clearly if your claiming "i'm sixty five and have 20 more good working years ahead of me" i fail to see this as a radical idea. unless the plan is for there to be no money for anyone ever. work is hard. fighting for your right to work is even harder. needless to say "the money is never good enough." makes you wonder why people fight "for so little." something about work being considered an ethical construct (a "work ethic") stands out to me. obviously i would not argue with our resident expert on Social Security here in Bruce K. what would need to be done to make the rather straightforward authority actually "pay out" to designated beneficiaries is indeed "yet another scary thought." sounds like yet another good reason to have a good economy...so defined as productive assets producing, throwing off free cash flow, having that cash flow treated in a respectful manner (by both public AND private) with a focus on creating growth that can "trickle down" to the Government folks who rely on all these working people and their "ethical construct." http://utmost.org/am-i-my-brother%E2%80%99s-keeper/
If we had a clue we would use social security to fund the mortgage market. 5% loans pay back more than double so half of loans could go to zero and they still don't lose any money. Use our interest paid to fund our retirements. otherwise we pay interest on our mortgage and interest on the Treasury debt. All so the banker scum can get their cut.
What would be the details of that plan? How would it be funded and operated?
The problem is disproportional increase in people in disabilit. Either most of that increase is fraud, or the rules are not tight enough and allow able-bodied people to get disability. Everyone heard about fake medicaid/medicare reimbursements, what about fake "disabilities"?
My solution is temporary chemical KASTRATION. If you have at least 3 limbs and an IQ equivalent of 8 grader AND still want benefits - you don't get to screw. Ready to screw again? Get off the benefits!
I made my DI "call" today I filed for free shit, I'm gonna force the issue or ride free for the rest of my life, your move bitches.
We have reached end game: no one who understands the problem is allowed to speak, no one is allowed to question anyone who could cause changes. All remarks are buried if they address the funding problem.
We will continue to do what we are doing until it stops working. At that point....all together now..."no one coulda seen it coming"..
Kyle Bass is right: The plan is to let the dollar die. All actions viewed with this perspective make sense.
And once they've screwed us in the ground, they're gonna pound us through the planet.
Anyone applying to either DI or Social Security in the very near future will be taken to see where the little green crackers are being made, where they will become one with the process.
Having been a cancer patient, I can tell you that it is very difficult to get on SSD. I heard this from women on chemo and who were expected to work right through it. Metastasis (asympatomatic) is not a SSD worthy diagnosis. You must be: unable to work(full-time) or expected to be unable to work (full-time) for at least 12 consecutive months. (edited to correct)
How I believe the fraudulent "patients" get SSD is through fraudulent doctors and attorneys. Two years of applying over and over again (diligence) seems to be what it takes otherwise. My friend's wife has MS and is too proud to apply for SSD, even unable to walk across the room. She should have started the process already but that is a personal decision that is hard to challenge. (they could use the income).
In medical arena, there is a change. When you are seeing a physician and tell him you have back pain, his statement in the chart reads:
"The patient endorses he has back pain." "Endorses" being the key word we are now seeing.
Yes, I think that there is going to be a cull in some fashion. Denying treatment? Expediting the evolution of debilitating illness to extinguish patients? I do not know what they have up their sleeve, but something is in the air in the medical field. Doctors I know just shake their heads in wonderment that it is so bad.
I applied today, I made a "call" on the Socialist bet that I wouldn't "call" and instead work till defrauded or death, fuck that shit.
I'm like tens of millions of hard working Americans that could work but won't anymore, me and my mob are going to force raised standards for eligibility or a free ride for the rest of our life.
YOU DON'T WANT TO BE THE LAST GUY PULLING THE CART.
Perform a cost benefit analysis of working* versus not, work failed, big time.
women who look like that do not clean.
they do if you pay them enough
Just tell her there's some shiny glittery stuff hidden under the rug
Reminds me of the artwork by the immortal Art Frahm:
http://lileks.com/institute/frahm/index.html
Wow - two desktop backgrounds of hotties - thanky...
Ha! But a deeper symbolism remains consistent: She's not actually cleaning(making good policy), despite appearing to be a cleaner (bureaucrat/legislator)
16% rings a bell. If I understood it correctly, yesterday my Ophthalmologist told me he got a 16% cut from the Government. I have had this young guy for years and he has always been so upbeat and cheerful. Yesterday he was grim and pissed. If he can find a way out, he is gone.
With my yearly visit to my GP last week I got a 4 page form (without a form # or an identifier) asking the usual questions along with some new ones.
When I asked the admitting nurse where they got these new forms she said the computer. When I asked where they come from to the computer she said the office had constructed them. This is in Southern California March 2013.
Yes, I am in Medicare. I am at mid 70s and still work cause I need the money. I have never been able to afford tobacco, alcohol, dope, or be sick, so consequently I do not cost the system a bunch of money. BUT, every year I turn down procedures that are really expensive. Last year it was a head scan and a colonoscopy. I am unsure if these were suggested because I supported Obama 5 years ago or because my feet hurt.
However, AS an old person I want to pull my share of the load so a young guy I know in New Mexico can stay on disability and ride one of his two Harleys. Sounds fair, right?
Goss simply laid out all the options. I doubt he recommended one over the other. So once again your headline is deceptive. DI has basically turned into a welfare scheme, not to be confused with SSI. It's the politicos that will make the decision on DI, not the actuary, and it will be a political process.
Medicare can never be fixed as long as healthcare is not fixed. Obamacare was a step in the wrong direction at a time when stupidity might be fatal. Even if Obamacare is repealed, several years have been wasted and it is obvious that the political class is either clueless or hopelessly corrupt, regarding the issue.
Deregulate healthcare and lots of good things happen immediately.
Here's the prob with DI: penny-pinching Congress (GOP) doesn't want long-term unemployment bennies and it doesn't want a jobs program particularly for older workers. When the 99 week unemployment bennies are used up, the older workers go to the doctor and the lawyer and get on DI.
The alternative is to start a meth lab or sell presciption drugs. Not much of a choice, is it?
So ... DI is inundated with claims. What to do? Goss suggests commingling DI and SS funds: it's the 'band aid' solution. GOP die-hards suggests arresting workers on DI for fraud and putting them into prison ... not realizing this alternative would cost a lot more than either DI or SS or even both together. What folks don't realize, is -- like the eurozone right now -- there is no cost free, easy solutions out there. If you don't pay people today you pay them a lot more tomorrow.
Best policy is a jobs' plan for older workers something that would provide a bit more income than DI. That would obviously have to include something other than pet highway construction jobs. That would also have to include removing some of the @#$%& anti-small business bullshit that has been enacted since ... 2000 or so.
Look around ... there are billion things that need doing in this country ... and people are paid to do nothing. Pay them a little more to do something. The same folks can in turn pay into SS, killing two birds with one stone. How hard can that be?
give every body
a can to kick....
pay them by the mile
Please revisit reality someday soon. "penny-pinching Congress (GOP)"? Trillion dollar deficits as far as the eye can see, and you claim that they're pinching pennies? I'd say that Congress is, and has been for some 50 years, generally irresponsible.
Also 99 weeks of unemployment are no more - where did you get this from? Which state still has 99 weeks?
He has a point --- Congress has been pinching pennies (and dollars) from my pockets for years.
There hasn't been much choice for quite some time now.
It's pretty hard to do it right the first time, or in our case, each time after that first time. So after awhile you break your back just so someone else can run over it. We ran out of money trying to get it right, and so we sit home waitin for the cure or to die.
Bad Accounting will take down this country worse than an invasion
A troubled accountant you must be then, to survive.
This is the best solution for this country. Put people to work in lieu of receving free benefits. There are literally millions of things they could be doing. This goes for unemployment, DI and forced retirees. Keeping people active will help reduce other costs like medical. We are already spending the money with no return. Why not get something out of it. Based on physical ability people could be working instead of laying at home and better for self esteem to get up and go to work everyday.
And the fraud bastards should be prosecuted if for no other reason than to be a deterrent to future fraud bastards
That would require jobs programs, even more socialistic than food stamps
But the fraud bastards are the psychiatrist's, I asked to his take job, and they said they didn't need to see me anymore.